Consumer-Directed Health Plan and Health Savings Account Frequently Asked Questions

Find answers to questions regarding:

Consumer Directed Health Plan 

What is the Consumer Directed Health Plan? 
The Consumer Directed Health plan is administered by BCBSM. It is an HSA-compatible health plan that meets IRS deductible, out-of-pocket maximum and coverage requirements. 
How do the deductible and out-of-pocket maximum work when I have more than one person on my contract?
A family deductible applies when more than one person is covered on the plan. The ENTIRE family deductible must be satisfied, by one or any combination of the family members, BEFORE the plan begins to pay the claims at 90%.
How does the Consumer Directed Health Plan work with a Health Savings Account? 
The Consumer Directed Health Plan provides your health care coverage. The Health Savings Account works in conjunction with your health plan to cover out-of-pocket health care costs, such as deductible and coinsurance, from a tax advantaged savings account.   
How does the Consumer Directed Health plan allow me to pay less for medical care?
You have a choice in how and where you receive medical services:
  • Select doctors and facilities that are in your plans network. Using out-of-network providers costs more 
  • Select generic medications when available. They have the same active ingredients but cost less than brand-name drugs
  • Switch to mail order prescriptions for maintenance drugs. You will pay up to 33% less when using mail order
  • Use cost comparison tools provided by the health plan. They allow you to select the procedure, location, type of facility, and provider quality designations that meet your needs
  • Talk with your doctor about how you can save money for medical services
I am enrolled in the Consumer Directed Health Plan but do not cover my children. Can I use the money in my HSA to pay for my children’s medical expenses? 
Yes. The money in your HSA can be used to pay for qualified medical expenses for any family member who qualifies as a dependent on your tax return. However, if the dependent isn’t covered under your health plan, his or her expenses won’t be applied toward your deductible or out-of-pocket maximum.
How will I know what my out-of-pocket costs are before receiving medical services?
Cost estimates are available when you log in to your BCBSM account at (under Find a Participating Provider > Estimate Your Cost) or on the mobile app. Cost estimates reflect the discounted rates BCBSM pays providers like doctors, hospitals and specialists. The estimate reflects relevant copays, remaining deductibles and/or out-of-pocket maximum balances at the time of your search. Note that the prices shown are based on your active BCBSM coverage. Consumer-Directed Health Plan costs will not appear until you are actively enrolled beginning Jan. 1, 2024. For more information, review BCBSM Cost Estimate FAQ.

HSA Basics

What is an HSA? 
An HSA is a savings account used in conjunction with an HSA-compatible health plan, like our Consumer-Directed Health Plan, that allows you to save money, pretax, to pay for qualified medical expenses. 
What is a Customer Identification Program (CIP) and why is it necessary for opening an HSA? 
In order to complete the opening of your Health Savings Account, the USA PATRIOT Act, mandates the successful completion of a Customer Identification Program (CIP). The Customer Identification Program (CIP) is a federally mandated process used to verify the identity of individuals when opening a Health Savings Account (HSA) or any other bank account in the United States. As part of the USA PATRIOT Act, the CIP adds security to your HSA and helps protect your personal information.
Can I Use a P.O. Box address to complete the Customer Identification Program (CIP)? 
To complete the CIP, you may be requested to provide a non-PO Box address. If a non-PO Box address is required you will be notified by HealthEquity, the HSA administrator. There are two options you have to provide this address: 
  • Provide your non-PO Box directly to HealthEquity. If you update your address with HealthEquity, you will be required to provide documentation to support the address change. Additionally, you will be required to maintain all name and address changes with HealthEquity going forward. 
  • Update your current address on file with the University. To update your Physical (street) Address Information, go to Wolverine Access and follow these steps:
    • Enter ‘Update Personal Information’ in the search bar
    • Select the Update Personal Information tile
    • Then select the Addresses link
    • Click the pencil icon on the Current Local address
    • Enter the new address
    • Click ‘Okay’
How is HealthEquity, Inc. involved with my HSA?
HealthEquity works with Blue Cross Blue Shield of Michigan to administer your HSA. However, HealthEquity isn’t involved in administering your health plan. 
What are the benefits of an HSA? 
An HSA allows you to set money aside to pay for current health care expenses or save for future retirement health care needs. It also:
  • Allows you to decide when and how to spend your money
  • Provides potential tax savings with payroll deductions, interest earned and use of funds for qualified medical expenses – all tax free 
  • No ‘use-it-or-lose-it rule, HSA funds never expire—even if you change health plans, employers or retire
Who owns my HSA? 
You own the HSA and the money in the account.
Who is eligible to open and contribute to my HSA? 
You can open and contribute to an HSA if you’re enrolled in an HSA-compatible health plan and:
  • Aren’t covered by another health plan that isn’t HSA compatible
  • Aren’t enrolled in Medicare or Tricare
  • Don’t have a government-sponsored health plan from another country
  • Don’t have access to funds in a flexible spending account or health reimbursement arrangement that will cover medical expenses
  • Can’t be claimed as a dependent on someone else’s tax return  
Once your HSA is open, you, your employer or a third party can contribute to it, up to the maximum annual limit. 
Is there a limit on the amount I can contribute to my HSA? 
The Internal Revenue Service adjusts HSA contribution limits each year. For 2024, the contribution limits are:
  • Individual: $4,150
  • Family (2 or more individuals): $8,300
  • For individuals 55+, there is an additional $1,000 catch-up contribution available
The University will have controls that prevent payroll deductions from exceeding the maximum annual limit. However, it is your responsibility to ensure that any external contributions (plus contributions through the University) do not exceed the IRS maximum annual limit.
If my spouse has Medicare, can I contribute to an HSA? 
Yes. As long as you aren’t enrolled in Medicare and remain enrolled in an HSA-compatible health plan, you can contribute to an HSA.
Are HSA catch-up contributions allowed? 
Yes. An annual HSA catch-up contribution of $1,000 is allowed for those ages 55 or older. 
What happens to my HSA when I am no longer employed by the University? 
You own the HSA account and the funds in the account. If you leave the funds in your HealthEquity account, there is a $3.95/month maintenance fee. 
Do I need to designate a beneficiary for my HSA?      
It’s important to designate a beneficiary to make sure your HSA funds are transferred according to your wishes, without tax consequences, upon your death.  Designate or change your beneficiary through your Blue Cross member account.
Can I be enrolled in the Consumer-Directed Health Plan (CDHP) with a Health Savings account (HSA) and a Health Care FSA?  
No, but you can be enrolled in the CDHP and HSA and a Limited Purpose FSA. The Limited Purpose FSA covers vision and dental services while the HSA covers medical costs. U-M will only contribute to the HSA established under the University of Michigan.
Both me and my spouse work at the university. Can my spouse be on my HSA account?
No. Each person must open their own HSA account.  You cannot have a joint HSA.
Can I be enrolled in the CDHP with HSA plan here, while my spouse who works outside the university is enrolled in an FSA?
No, the spouse cannot be enrolled in a FSA.
Can I be enrolled in a FSA plan here, while my spouse who works outside the university is enrolled in a HSA?
No, the spouse cannot be enrolled in a HSA. Both household members cannot be enrolled in an HSA and FSA. You can be enrolled in CDHP with an HSA plan and elect a Limited Purpose FSA.  
If I take a deduction from my HSA, do I need to report it on my tax returns?
Because your HSA is a tax-advantaged account, the IRS requires you to report how you use the account on your income tax return using Form 8889. HealthEquity provides two tax statements as applicable each year: 1099-SA and 5498-SA. For more information, view
Seek guidance from a qualified tax adviser if you have questions regarding tax return reporting requirements.
What Happens if I had a Health Care Flexible Spending Account (FSA) the previous plan year, can I contribute to a Health Savings Account (HSA) in the new plan year?
If you elect to enroll in the Consumer-Directed Health Plan (CDHP) with HSA during Open Enrollment and you have outstanding balances in your Health Care FSA, you MUST spend down your remaining balance to $0.00 and have all claims processed before December 31 before you can contribute to an HSA. Otherwise, you will NOT be eligible to contribute to your HSA until April 1st.
What happens if I enroll in the CDHP with HSA mid-year due to a Life Event?
When you enroll in the CDHP with HSA mid-year, you have a decision to make regarding how much to contribute to the HSA for the current calendar year. You should seek guidance from a qualified tax advisor to determine the best option.
Prorated Contribution: You may elect to contribute a portion of the annual contribution that is equivalent to the percentage of full months you are enrolled in the CDHP with HSA. 
To determine the prorated amount, divide the yearly allowable maximum contribution by 12, then multiply the results by the number of months you are enrolled in the HSA qualified plan during the year.
Full-Contribution (Last Month) Rule: If you plan on being enrolled in the CDHP with HSA for the remainder of the current year and all of the following year, you may elect to contribute the maximum allowable contribution amount for the current year.
If you lose eligibility during the following year (except by death or disability), you must pay taxes on the excess contributions as well as a 10% tax penalty.
If I'm nearing retirement and 65 or older, can I still contribute to an HSA?
Per IRS regulations and Medicare requirements, you MUST stop your HSA contributions 6 months prior to retiring and applying for Medicare. Fill out the HSA Change/Enrollment form. Fill out the HSA Change/Enrollment form.

Managing HSA Funds 

What is a qualified medical expense? 
A qualified medical expense is a health care expense that is approved by the IRS. Some examples of qualified medical expenses are deductibles, coinsurances and post deductible copayments. Discover what medical expenses your HSA may cover at
Am I limited to using money in my HSA for qualified medical expenses only? 
No. However, penalties may apply for non-qualified withdrawals before age 65. 
  • If you’re younger than 65, you’ll be taxed and receive a 20 percent penalty. 
  • If you’re 65 or older, you’ll be taxed on the money you use, but won’t have to pay a penalty. 
What if I pay for qualified medical expenses out of pocket? 
If you pay for qualified medical expenses out of pocket, you can reimburse yourself with funds from your HSA. See the Tools and resources section of this document for directions on how to request reimbursement through your Blue Cross member account. 
Can I transfer my HSA funds from a previous employer? 
Yes. You’ll need to complete a transfer or roll over form (and any applicable paperwork with your previous administrator) to have funds moved to your HealthEquity HSA contact customer service at 877-284-9840.
Who invests the money contributed into my HSA? 
You decide whether or not to invest your HSA funds. Any balances over $1,000 can be invested in a variety of funds. These investments are similar to other online trade investments and aren’t Federal Deposit Insurance Corporation insured.

Using an HSA to Save for Retirement 

Can I roll money from my Individual Retirement Account into my HSA? 
Yes. You can make a one-time roll over from your IRA into your HSA, up to the maximum contribution limit for that year (other rules may apply). 
I plan to enroll in Medicare in the upcoming year. Can I enroll in the CDHP with HSA?
No. If you enroll in Medicare, then you are no longer eligible to contribute to an HSA. And there are tax and financial penalties for those who contribute to an HSA when they are not eligible. To reduce the risk of these penalties, the Centers for Medicare & Medicare Services and the IRS suggest that you stop contributing to your HSA before age 65, or more than six months before you enroll in Medicare if you are delaying Medicare enrollment until after age 65.
What happens to money in my HSA  when I retire?
That depends:
  • If you’re under age 65, retired and still have an HSA-compatible health plan, you can continue to contribute to the HSA and use the funds for qualified medical expenses. 
  • If you’re under age 65, retired and don’t have an HSA-compatible health plan, you’re no longer eligible to contribute to the HSA, but can continue to use the funds for qualified medical expenses 
  • If you’re 65 or older, retired and on Medicare, you’re no longer eligible to contribute to the HSA, but can continue to use the funds for qualified medical expenses. 
  • If you’re 65 or older, you’re not limited to using an HSA just for health care expenses. You may use it for other expenses, however you’ll need to pay income taxes on those amounts but won’t have any early withdrawal penalties.

Tools and Resources 

How can I access my account information? 
Your Blue Cross member account is a useful tool to help keep track of your HSA. Register or log in to your member account from the Blue mobile app or at to check your account balance, access forms, pay health care providers and much more.
What other HSA resources are available once I link to the HealthEquity member site?  
Resources include:
  • HSA education videos and tutorials: 
  • Contribution calculator: Estimate contribution amounts and instantly see tax savings
  • Direct links to the Blue Cross transparency tools
  • Direct links to Blue Cross wellness sites 
Is there a debit card? 
Yes, up to three HSA debit cards are available free of charge for your convenience. 
Who do I contact if I have questions about my HSA? 
Call HealthEquity Member Services 24/7 at 1-877-284-9840 for questions about your HSA.  
If you have questions about your Blue Cross coverage, call the Customer Service number on the back of your Blue Cross ID card. 
How can I learn more? 
Visit for more information about HSAs.